Luxury brands face a unique challenge when it comes to engaging online.

Because the very nature of eCommerce makes products accessible to the mass market, breaking down barriers of location and exclusivity doesn't always compliment with the style of marketing luxury brands are used to. Actually, it is completely at odds with the fundamental basis of high-end brands’ success: personalised attention, limited accessibility and a feeling of a privileged brand experience.

It’s quite a dilemma. On the one hand, millennial consumers expect to be able to satisfy all their purchasing needs online and with increasing immediacy. On the other hand, the ability to obtain luxury goods in this way reduces their differentiation from everyday goods, diluting the element of exclusivity which made the product attractive in the first place.

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In the same way, negotiating the world of social media presents a Catch 22 situation – how can a brand project a truly aspirational image and maintain the necessary firm grip on their message, using a medium which requires an open forum with consumers in order to succeed?

As a result of these challenges, as many as 40% of luxury brands do not sell their products online. However, this is a situation which no brand can afford to find themselves in for long. According to analysts McKinsey and Co, luxury sales’ online share is set to triple to 18% by 2025 with a resulting value of €70 billion, making it the third biggest luxury market (after China and the US). That’s a market which cannot be ignored. Sonja Prokopec, a professor at ESSEC observes that "Luxury brands don’t have the luxury of not being online. The global consumer of today is online and connected. This is where they are looking and they are expecting brands to be there."

Research by BBC Advertising indicates that digital engagement is even more important to affluent millennials than it is to the non-affluent. The September 2016 worldwide survey showed that 70% of affluent millennials feel that their favourite brands play an integral role in their lives, compared to just 51% of non-affluent millennials. Even more revealingly, 60% consider themselves to be defined by the brands they purchase (compared to 44% of non-affluent respondents) – a pretty powerful statement in anybody’s book.

Given that nearly three quarters of luxury purchases (even those made in a bricks and mortar store) are influenced by an online touchpoint, the need for digital engagement is resounding. Research into the omnichannel decision journeys of around 7,000 luxury shoppers showed that they - to a greater degree than other consumers - tend to buy from brands they already know. The findings show that "More than three quarters of luxury purchases come from the few brands present in the initial consideration. This means that a brand that’s in the running from the start set has a 25 percent chance of being finally purchased – which is twice the probability of a brand that’s been added during the next phase of the decision journey, the evaluation process."

Add to this the fact that luxury purchases often entail a long and involved decision process, and it becomes essential for luxury brands to ensure that they are at the forefront of their customers minds on an ongoing basis, and to engage with them where they are (which to a great degree, is online).

One of the most nerve-wracking aspects of digital engagement for luxury brands, is the idea of User-Generated Content. Here is an area where the brand has little control, and the consumer has unbridled opportunity to influence other customers’ opinion. But in fact, it’s another opportunity not to be missed. Luxury consumers’ smartphone ownership is, perhaps unsurprisingly, higher than for other demographics – as high as 100% in certain countries. Two out of three of these wealthy shoppers post social media content monthly (photos, reviews, videos, reposts), and 15% of them do so on a daily basis. When you consider that every piece of content a luxury brand or its consumers post reaches a fifth of luxury buyers, it’s clear that a brand which successfully harnesses their User-Generated Content rather than fearing it, will be adding a substantial resource to their marketing strategy arsenal.

If you’re interested in finding out how to leverage User-Generated Content in the luxury arena, talk to us.